The income statement, also known as the profit and loss statement, is the financial report that shows a company’s profitability over a given period — typically a quarter or a year. It details revenue earned from core operations, subtracts operating expenses, and includes taxes and interest to ultimately show net income or loss. This statement answers the key question: Is the company making money or not? Investors, analysts, and business owners use the income statement to assess how effectively a company generates profit from its operations. It also includes metrics like gross profit, operating profit, and net income, which provide insight into cost control and efficiency. Unlike the balance sheet, which offers a snapshot in time, the income statement covers a specific period, revealing financial trends. Understanding this statement is essential for evaluating financial health, setting performance benchmarks, and making strategic decisions based on profitability trends.